FCA to join digital regulation body as scope of work broadens

The DRCF was established in July 2020 by the Competition and Markets Authority (CMA), Information Commissioner’s Office (ICO) and the Office of Communications (Ofcom), to ensure a greater level of cooperation over the regulation of online platforms. The FCA was an observer member of the forum from its launch.

The news of the FCA’s involvement came alongside the publication of the DRCF’s plan of work for 2021 and 2022 (18 page / 466KB PDF). The plan has been informed by the emergence of new online markets during the Covid-19 pandemic and the associated risks, such as the spread of disinformation and misinformation as well as the potential restraint on growth through the concentration of power among a small number of technology companies.

The DRCF said its member regulators would respond strategically to industry and technological developments by launching joint projects on “complex, cross-cutting issues”. Projects will include research into service design frameworks; artificial intelligence; digital advertising technologies; and end-to-end encryption.

Work will also be informed by the CMA’s recent research on algorithms, which focused on the potential harm to consumers and reduction in competition caused by algorithmic systems.

Data regulation expert Michele Voznick of Pinsent Masons, the law firm behind Out-Law, said: “The expansion of the DRCF to include the FCA demonstrates the growing importance of data across sectors and regulatory disciplines.

“Recently the secretary of state for culture, media and sport, Oliver Dowden, expressed the government’s intention to reform the UK’s data protection rules to lessen the ‘burden’ on businesses while maintaining security. The planned reforms will open up greater economic opportunity. As the UK’s next Information Commissioner should focus on helping businesses innovate more effectively using personal data, businesses and consumers will expect the forum to generate the right balance of providing guidance against undertaking enforcement by the various regulators.” Voznick said.

“However, the crossover of data and consumer issues to be considered by the DRCF demonstrates why businesses need to ensure that they have an effective approach to the use of data within their organisations, or they may face enquiries from multiple regulators,” Voznick said.

The DRCF said it would develop a joined-up regulatory approach, with a particular focus in 2021 on the interrelation between data protection and competition regulation; the Age-Appropriate Design Code, which came into force last September; and the regulation of video-sharing platforms and online harms.

The regulators will also explore operational models that will support more efficient skills and expertise sharing in the future, such as cross-regulator specialist teams.

Competition law expert Alan Davis of Pinsent Masons said that stakeholders would welcome the move by regulators to ensure a more joined-up regulatory approach in digital markets where there are areas of overlap.

“This is likely to drive better outcomes for consumers but also avoid inconsistent approaches. It will also be interesting to see whether and how the DRCF takes account of John Penrose MP’s warning to avoid regulatory creep in the regulation of digital markets, especially in relation to the use of ex ante regulatory powers. A joined-up approach by the regulators could also help to mitigate the effects of regulatory creep and reduce red-tape and bureaucracy,” Davis said.

According to the DRCF, the workplan represented a “real step change” in scope and ambition that would also build better clarity for stakeholders.

The forum also plans to work closely with other agencies, including the Advertising Standards Authority, Prudential Regulation Authority,  Payment Systems Regulator,  the Intellectual Property Office, and the Gambling Commission.